Placement officer

References

Research

"The Marginal Product of Capital: New Facts and Interpretation"(Job Market Paper) This paper finds that aggregate marginal products of capital across countries have converged over time and it identifies trade integration as an important driving force behind this trend. Following the influential paper by Caselli and Feyrer (2007), a measure of the marginal product of capital is constructed which shows that (i) capitalabundant countries have lower marginal products and (ii) that countries have converged in marginal products since 1970. Decomposing the adjustment reveals that changes in the capital share and capital accumulation are the two main margins of adjustment. However, these are not the result of large-scale reallocation through international capital flows. Instead, this paper demonstrates how the dramatic increase in world trade over the last decades explains the convergence of marginal products. In a tractable multi-country, multi-sector model featuring both inter- and intra-industry trade, trade integration leads to convergence through two channels. The first one is specialization in labor vs. capital-intensive sectors commonly known from Heckscher-Ohlin trade theory. The second channel acts through the response of aggregate savings to movements in wages and returns which affect capital accumulation and lead to convergence in the relative factor endowments. The predictions of this dynamic model are consistent with the new empirical facts and other well-known characteristics of the cross-country income distribution. Calibrating the model and quantifying the effect suggests that trade integration can explain about 30 % of the convergence in marginal products..

“Foreign Exchange intervention and the Dutch Disease”,with with R. Lama and J.P. MedinaWe study the optimal foreign exchange (FX) intervention policy in response to a positive terms of trade shock and associated Dutch disease episode in a small open economy model. We find that during a Dutch disease episode tradable production drops below the socially optimal level, resulting in lower welfare under learning-by- doing (LBD) externalities. FX reserves accumulation improves welfare by preventing a large appreciation of the real exchange rate and by inducing an efficient reallocation between the tradable and non-tradable sectors. For an empirically plausible parametrization of LBD externalities, the model predicts that in response to a 10 percent increase in commodity prices FX reserves should increase by 1.5 percent of GDP. We also find that the welfare gains from optimally using FX reserves are twice as high as the gains from relying only on monetary policy. These results suggest that FX intervention is a beneficial policy to counteract the loss of competitiveness during a Dutch disease episode.

Published as IMF Working Paper WP/17/70

Research Papers in Progress

"Quantity-Biased Technological Change" with J. Eeckhout, P. Kircher and C. LafuenteThis paper decomposes the effects of quantity-biased vs skill-biased technological change on the German wage distribution using matched employer-employee data from 1996 to 2012. It uses the theory developed in “Assortative Matching with Large Firms” by Eeckhout and Kircher, forthcoming in Econometrica.